Requests for Equitable Adjustment

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A request for equitable adjustment, or REA, is how a federal contractor asks the government to change the contract price, the schedule or both after something outside the contractor's control has increased the cost or time of performance. Most adjustments are resolved through negotiation of an REA, without litigation. A well-built REA gets paid faster. A poorly supported one invites delay, audit and denial.

Contractors commonly submit REAs when the government:

• Directs extra or different work, formally or informally, which is often called a constructive change.
• Delays or suspends the work, or interferes with the contractor's sequence of performance.
• Provides defective specifications, drawings or government-furnished property.
• Encounters, or causes the contractor to encounter, differing site conditions on a construction project.
• Accelerates the schedule, or refuses a justified time extension and requires on-time completion anyway.

Many contract clauses require the contractor to notify the contracting officer within a set time after it learns of a change or delay. The Changes clause, for example, generally requires the contractor to assert its right to an adjustment within 30 days of receiving a written change order. Boards and courts often excuse late notice when the government was not prejudiced, but contractors should never rely on that. Prompt written notice preserves rights and gives the government a chance to direct how the work should proceed.

An effective REA tells a clear story and proves the money. It should identify the contract clause that entitles the contractor to relief, explain what the government did or failed to do, show how that caused additional cost or time, and price the impact with supporting documents. For delay claims, a schedule analysis that ties the government's action to the critical path is usually essential. Costs should be presented in a format consistent with FAR Part 31 so the contracting officer and any auditor can follow them.

Unlike costs of prosecuting a claim, reasonable costs of preparing and negotiating an REA, including consultant and some legal fees, may be allowable contract administration costs and recoverable as part of the adjustment. How the request is framed and when it becomes a formal claim can affect whether those costs are recoverable.

An REA that does not itself qualify as a claim has no deadline for a government response, and Contract Disputes Act interest does not run while it sits. If negotiations stall, the contractor can convert the REA into a certified claim under the Contract Disputes Act. That starts the clock for a contracting officer's final decision, starts interest accruing, and opens the door to an appeal. The decision of when to convert is strategic, and it depends on the relationship with the agency, the amount at stake and the requirement that claims be submitted within six years after they accrue. We discuss this decision in more detail in our articles at bctwlaw.com.

We help contractors spot entitlement early, send notices that protect their rights, prepare and price REAs, negotiate with contracting officers and, when necessary, convert REAs into certified claims and pursue appeals. See our pages on Contract Disputes Act claims and the claims process, or contact us to discuss a change or delay on your contract.